My First Property

Buying An Apartment And Leaseholds

When you buy a house, the chances are that it will be a freehold property. And conversely when you buy a flat, the chances are that it will be a leasehold.

You also will know that with flats there are almost always service charges, so it is important that you look into these and work out exactly how much they are per year, and what services you get for the service charge - it'll be things like having the grass cut and the grounds maintained and that sort of thing.

Coming back to the leasehold, there is an important consideration to be aware of year. You need to find out how long is left on the leasehold before in theory at least the property is to be returned to the leasehold.

Most leaseholds these days tick down from 125 years, but if you are buying older properties then they often tick down from 99 years. It is very important that you know how long is left on the lease.

If you are going to buy with a mortgage, know that most lenders have thresholds where they won't let you have a mortgage because they deem there not to be long enough left on the lease. This is often at a cut-off of 70 years, but do check. The estate agent will know how long is left on the lease and let you know. Of course, you should definitely check how long is left on the leasehold anyway even if you are buying without a mortgage, because you will certainly want to get the price reduced if there are less than 80 years anyhow because if you ever sell the property on to someone who wants a mortgage, then you'll find yourself having to pay for the lease to be bumped up again in order that you can sell it, and that costs money.

Many people are not aware of this element of buying a leasehold property - so if you buy a property with, say, 81 years left and go to sell it 11 years later then you could be in for a surprise: you will probably have to pay to bump the leasehold back up to either the 99 years or 125 years or whatever the relevant amount is, and that can quite often cost over £10,000.

The bottom line is to be sure to find out about how long is left on the lease, and if it below the amounts where you can get a mortgage without any issues, then you should ensure that the vendor is going to buy to get the leasehold extended again before going ahead and making an offer.

More first-time house buying articles:

  1. Finding Property at a House Auction
  2. Finding a Property and Location
  3. Deciding on Your Property 'Must Haves'
  4. Living in Central London Pros and Cons
  5. Key Questions to ask at a property viewing


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